Cal Biz Lit

THE 2020 CONSENT JUDGMENT SETTLEMENTS

On February 12, we posted a summary of all of the Out of Court Settlements from last year, and that information is here.

As those who are active in the Proposition 65 settlement negotiations are aware, in court Consent Judgment settlements, required if the Private Party Enforcer has filed suit, are nearly always far more expensive then out of court settlements.  Last year, as we showed, there were 436 Out of Court settlements, averaging a total cost to the companies in question of $21,380 per settlement. 

In 2020, there were fewer in court Consent Judgment settlements.  There were 179, with an average total cost of $56,236.00 each (penalties, attorneys' fees and additional payments.  With respect to the out of court settlements, the fees agreed to comprised 83.32%.  For the consent judgment settlements, excluding the one settlement by the California Attorney General's office (which does not include attorneys' fees), the fees were 62.35%

Here is the full chart of the 2020 Consent Judgment settlements:

Glyphosate In the Trial Courts – Liability for Failure to Warn, Cancer Causation

As noted in CalBizLit on September 22nd, Proposition 65 warning requirements regarding the chemical glyphosate are currently being litigated. As it happens, aside from Proposition 65, glyphosate is also a subject of civil litigation, and is also in signficant dispute in that realm.
Let’s take a moment to be clear, because this is not actually universally understood: A company can be liable for a violation of Proposition 65 without any allegation (let alone proof) that anyone was injured as a result of that product’s sale or use in California. If Californians have been exposed to a potentially cancer causing or reproduction injury-inducing chemical without providing warning to California citizens, there is potential liability.
In contrast, liability under products liability theories in civil litigation requires that there be a finding that the given chemical not only was a potential cause of injury, but rather that it actually did cause (was “a substantial factor” in causing) an injury to the Plaintiff (or their decedent.)
The contrast between the two theories of liability is currently well illustrated when considering glyphosate. As noted in the September 22, 2021 edition of CalBizLit, there is a Court Order coming from the US District Court holding that the maker or user of glyphosate cannot be found liable under Proposition 65 for failure to have warnings about cancer risks on their products. The rationale is that it is a violation of the First Amendment to require such a warning because there is a substantial dispute in the scientific literature as to whether the product is actually a cancer causing substance.
In contrast, Bayer, the current manufacturer of the pesticide Round Up, which includes glyphosate as an active ingredient, is facing substantial civil liability. Most recently, the California Court of Appeals upheld a verdict that was rendered in 2019 favor of the Pilliod family. The husband and wife both claimed use of Round Up had caused them to develop non-Hodgkin’s Lymphoma. The jury had awarded them a total of $55 million in general damages, and $2 billion in punitive damages. The trial court reduced that number of $81 million total, including punitive damages, and the Pilliods agreed to accept that amount.
Bayer did not agree to even the reduced damages. In upholding the Judgment the Court of Appeals specifically approved the punitive damages by noting “Monsanto’s conduct evidenced reckless disregard of the health and safety of unsuspecting consumers it kept in the dark”.
Quite a contrast with a finding that companies that use glyphosate cannot be forced to put a Proposition 65 warning on the product. And this verdict is not an isolated one:: Bayer has paid out some 411 billion to settle cases pending against it for damages allegedly result in from glyphosate exposure. Bayer is, however, pursuing in the US Supreme Court a preemption defense based on 7 U.S.C. § 136 et seq., which requires that prior to distributing a pesticide in commerce, a manufacturer must register the pesticide with the United States Environmental Protection Agency (USEPA) by submitting scientific data regarding efficacy and health and environmental impacts, as well as proposed product labeling.

PROPOSITION 65 NOTICES OF VIOLATION IN 2021 FIRST QUARTER

In many previous years, we have reviewed and reported on CalBizLit onthe number of notices as to each listed chemical.  In every year we reviewed, the most frequently noticed chemical was DEHP, and number two was usually lead (or lead and compounds).  While we were unable to take the time to evaluate and report on the 2020 numbers, we recently received an analysis of the first quarter of 2021 from Scott D. Dwyer, PhD, Consulting Toxicologist with Washington State’s ToxRisk Consulting LLC.  Thanks to Scott and to ToxRisk Consulting.  Their report shows the following:

Chemical	NOVs	Example Products
Phthalates (DEHP, DINP, DIDP, DBP)	413	Plastic bags, cases, totes, grips, steering wheel covers.
Lead (or lead and compounds)	232	Spices, dried and smoked fish, frozen and dried fruits and vegetables, glass and ceramic ware, fishing tackle, brass fittings, lead solder, plumbing fixtures, dietary supplements.
Acrylamide	109	Baked goods, including chips, crackers, cookies, and ready-to-bake doughs.
Bisphenol A	27	Phone cases, duck calls, face shields, food containers.
Cadmium (or cadmium and compounds)	24	Dried seafoods, fruits, and meats, and sunflower seeds.
Mercury	14	Seafood
Chromium (hexavalent)	12	Leather gloves
Furan	9	Pretzels, baked beans, and soy sauce.
Arsenic	8	Foods, including dried shrimp, seaweed, and spices.
Carbon monoxide	8	Fire starters
Asbestos	3	Construction materials
Soots, tar, and mineral oils (coal tar)	3	Fire starter, camp stove, and charcoal.
Diethanolamine	2	Face and neck cream, bath gel.
Pulegone	2	Peppermint extracts
Wood dust	2	Wood chips and pine bedding.
Marijuana smoke and THC	2	Foods and smoking products.
beta-Myrcene	1	Thyme leaves
D&C Orange 17	1	Vinyl arm and leg rests.
N-Nitrosodiethylamine	1	Workout bands
N-Nitrosodimethylamine	1	Workout bands
Silica, crystalline (airborne particles of respirable size)	1	Sand-blasting work

CalBizLit reviewed the notices for the different phthalates for the January through March of this year, and found the following:

 DEHP:  325 notices

DINP:  63 notices

DIDP:  15 notices

DBP: 9 notices.

As has been the case in many years, this shows DEHP as the most frequently noticed chemical.  For example, from January 1, 2020 through December 31, 2020, DEHP was a subject of 1,292 notices!

THE 2020 PROPOSITION 65 OUT OF COURT SETTLEMENTS

Once again, CBL has reviewed all of the settlements of Proposition 65 matters last year, which are publicly available on the Attorney General's Web Site, examining the number of settlements, average total amount, lowest and highest amounts for all of the private party enforcers for last year.  The numbers for the out of court settlements in 2020 are right below.  Please note there is a certain amount of rounding up and down cents.  And clicking this chart pops it up larger.

OEHHA PROPOSES TO DRAMATICALLY CHANGE THE RULES FOR PROPOSITION 65 SHORT FORM WARNINGS

On January 8, California’s Office of Environmental Health Hazard Assessment (“OEHHA”), a part of California’s Environmental Protection Agency and the “lead agency” for Proposition 65, notified the public that it intended to make some major changes to the California regulations – California Code of Regulations Title 27, §25600 and following – particularly those concerning “safe harbor” short form warnings. 

The regulations set out the “safe harbor warnings,” meaning that while these warnings are not mandatory (because any “clear and reasonable warning” is potentially in compliance with Prop 65) if a company complies with the safe harbor warning regulations, no private party enforcer can contend they did not comply with the warning requirements.

The proposed changes are here. Primarily, these proposed changes will substantially change the permitted text and usage of the short form warnings.  Right now, those warnings can be used for any product and any chemical, and must be in a minimum six point font and a font no smaller than other “consumer information,” which is not well-defined in the regulations.  The text and appearance can be any of the following:

Pursuant to the new proposal, § 25602(a)(4) will be revised to provide as follows:

The short-form warning may only be used if:

(A) The total surface area of the product label available for consumer information is 5 square inches or less, and;

(B) the package shape or size cannot accommodate the full-length warning described in Section 25603(a), and;

(C) The entire warning is printed in a type size no smaller than the largest type size used for other consumer information on the product. In no case shall the warning appear in a type size smaller than 6-point type.

Even more significantly, the permitted text is revised in the proposed revisions to §25603(b), as follows:

(b) A short-form warning may be provided on the product label  . . .  using all the following elements:

(1) The symbol required in subsection (a)(1) [The exclamation point in the yellow triangle].

(2) The word “WARNING:” in all capital letters, in bold print.

(A) For exposures to listed carcinogens, the words, “Cancer Risk From [Name of one or more chemicals known to cause cancer] Exposure - www.P65Warnings.ca.gov”

(B) For exposures to listed reproductive toxicants, the words, ” “Risk of Reproductive Harm From [Name of one or more chemicals known to cause reproductive toxicity] Exposure - www.P65Warnings.ca.gov”

(C) For exposures to both listed carcinogens and reproductive toxicants, the words, “Risk of Cancer From [Name of one or more chemicals known to cause cancer] And Reproductive Harm From [Name of one or more chemicals known to cause reproductive toxicity] Exposure - www.P65Warnings.ca.gov”

(D) For exposures to a chemical that is listed as both a carcinogen and a reproductive toxicant, the words, “Risk of Cancer and Reproductive Harm From [Name of one or more chemicals known to cause cancer and reproductive toxicity] Exposure - www.P65Warnings.ca.gov”.

The new revisions (at §25607(a)) require the same revisions to short form warnings as to food, ending, as now, with the URL www.P65Warnings.ca.gov/food.  The revisions also require that “The warning must be set off from other surrounding information and enclosed in a box.

These are major changes:   The new regulations will severely limit the locations and uses of the short form warnings, and require the identification of the chemicals in question.

Another big set of changes is this:  pursuant to §§ 25602(b) and (c), Internet and Catalog warnings are still required to meet the safe harbor warning requirements, but only the long warnings – not the short warnings – will meet these requirements.

When or if this will take effect remains to be seen.  OEHHA has authorized comments to be submitted until March 8, 2021, with the deadline and submission methods set forth here.  After approval by OEHHA, if that happens, it will be submitted to the California Office of Administrative Law for review and approval.  That can be a really long process some times.  And as drafted, the OAL is asked to select an operative date one year after OEHHA approves the amendments. And the regulations provide that the changed provisions will take place on the operative date selected by OAL, with products manufactured before that date governed by the earlier regulations passed in 2016 and effective July, 2018.

We will be closely watching what happens with OEHHA and the OAL, and provide further reports.

HERE ARE THE 2019 PROPOSITION 65 CONSENT JUDGMENT SETTLEMENTS

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As we do every year, CalBizLit has reviewed all of the 2019 Proposition 65 settlements, which are posted on the Attorney General’s web site. Today, we will be posting summaries of the court approved consent judgment settlements. In the next few days, we will do the same thing as to out of court settlements.
Almost all of the consent judgment settlements involving products and alleged failure to warn of chemical exposure include the following elements:

• Agreement by the defendant, and a court order, to either reformulate a product category or to provide warnings that comply with the Office of Environmental Health Hazzard Assessment’s (“OEHHA’s”) “Safe Harbor Warning Regulations.”
• Payment by the defendant of an agreed penalty amount, with 25% going to the plaintiff and 75% to OEHHA, as required by Proposition 65; and
• Payment by the defendant of the plaintiff attorney’s fee and cost claim, in an amount agreed to by the parties.

Our calculation of the number of settlement judgments is slightly different than the Attorney General’s. That office’s calculation is 284, we calculate 281. The total amount of settlement payments for 2019 in court approved settlements was $17,059,870, meaning that the average payment per settlement was $60,711. Of the $17 million+, $3,003,490 was for penalties, $1,572,592 was for “additional settlement payments” which must meet certain requirements, must be approved by the Court, and need to be shared with OEHHA. And $12,483,788, or more than 73% of the total settlement amounts went to attorneys’ fees and costs. The entitlement to attorneys’ fees does not appear in Proposition 65, but is permitted under California Code of Civil Procedure section 1021.5, permitting an award of attorney’s fees to attorneys prevailing in a matter serving the public interest. Proposition 65 having been enacted by the voters in 1986, it is generally deemed by the courts to serve the public interest.

The following chart shows the number of consent judgment settlements, average amount of settlement, highest and lowest settlement for 18 of California’s Proposition 65 Plaintiffs (also known as “Private Party Enforcers”):

To see information on the 2019 settlements by other plaintiffs, click right below:

OEHHA Issues Safe Use Determination as to BPA in Polycarbonate Glasses

Approximately seventeen years ago, the Office of Environmental Health Hazard Assessment (“OEHHA”), the lead agency for Proposition 65, issued a regulation (now in 27 CCR 25204) stating that

As a part of its overall responsibility to provide guidance to persons or organizations that are or may be affected by the Act, the lead agency will consider the applicability of the Act or the exemptions specified in the Act to business activities or prospective business activities. A safe use determination issued by the lead agency represents the state's best judgment concerning the application of the Act to the particular facts presented in the request.

Just as it can be very expensive for a company to defend a Proposition 65 suit by proving that the exposure level is below the No Significant Risk Level for listed carcinogens (“NSRL”) and/or below the Maximum Allowable Dose Level for reproductive toxicants (“MADL”), obtaining a Safe Use Determination (“SUD”) isn’t easy either. First of all, it can’t be done by a company that has received a notice of violation for the product and chemical in question.

And secondly, the expense can be high: The submitting party must provide scientific evidence in support of its request, which is not inexpensive to obtain and assemble. The current version of the regulation must first be accompanied by a $1,000 non-refundable processing fee. But next, “the requester shall be assessed a charge in the amount of any costs to the lead agency or other state agency which are necessarily incurred in considering the request and which exceed $1,000.” And these costs just about always exceed $1,000 by a great deal, although probably less than defending enforcement litigation.

Nonetheless, it can make a great deal of sense when the SUD is requested by and successful for an industry organization.  This is what was successful for "The Vision Council" after it requested a SUD as to exposures to BiPhenol A ("BPA")  from certain polycarbonate prescription glasses and sunglasses, over-the-counter reading glasses, non-prescription sunglasses, and safety glasses.

BPA is listed as a female reproductive toxicant. And under the regulations setting maximum allowable dose levels (i.e., "MADL," the safe harbor levels for listed reproductive toxicants), the MADL for BPA, for dermal exposure from solid materials, is 3 micrograms per day of exposure. In undertaking its SUD analysis, OEHHA drew these conclusions:

Based on OEHHA’s screening-level analysis of the information and data provided by TVC, the upper-end estimate of dermal exposure to BPA for users of certain polycarbonate eyewear products (prescription glasses and sunglasses, OTC reading glasses, non-prescription sunglasses, and safety glasses) manufactured, distributed, or sold by TVC member companies, with acetonitrile extractable concentrations of BPA as specified above, is 0.53 µg/day.  This exposure estimate falls below the "Maximum Allowable Dose Level (MADL)” for BPA (dermal exposure from solid materials) of 3 µg per day.  The MADL is defined as the level of exposure that corresponds to the “no observed effect level” divided by 1000.  Thus, exposures to BPA from use of such eyewear products, under the conditions described in OEHHA’s assessment, would not require a Proposition 65 warning. 

So, to make a long story short:  No Proposition 65 warning about BPA is required for plastic-framed glasses. This suggests that a SUD can be useful at times for an industry. 

And Now, Here are the 2019 Out of Court Proposition 65 Settlements

Last week, we provided a summary of the 2019 court-approved Proposition 65 settlements.  The consent judgment settlements are generally more expensive than the out of court ones in two respects.  If the parties immediately negotiate and agree to the filing of a suit, a consent judgment and a motion for court approval, the attorneys' fee element will just about always be somewhat more.  If suit is filed and served, and the case prosecuted to some extent before settlement, the attorneys' fee element of the settlement be much more. So while the average amount paid pursuant to a consent judgment settlement last year was $60,711 (penalties, attorneys' fees and costs, and a few additional payments), the average cost of an out of court settlement (fees and costs and penalties only) was $20,102.  Here are the two charts (as in the last post, you can see these larger by clicking them):

 

AND NOW, HERE’S CBL’S REPORT ON 2018 CONSENT JUDGMENT SETTLEMENTS

Settlements of Proposition 65 cases can take the form of “out of court settlements,” such as those we reported on last month, or consent judgments. The latter are agreements between the parties that are in the form of judgments, that go to trial court for approval (after the Plaintiff files a Complaint and the Defendant an Answer). With rare exceptions, these are approved by the Court, and become both settlements and judgments.

Some bounty hunters mostly insist on consent judgment settlements for several reasons. One is that while agreed penalties are divided between the bounty hunter and OEHHA 25% / 75%, in a consent judgment, the parties can agree to additional payments -- “payments in lieu of penalty” -- that go 100% to the bounty hunters.

And some defendants insist on consent judgments as complete bars to other actions involving the same companies, the same products and different bounty hunters. California law establishes that a consent judgment entered into by a Plaintiff acting in the public interest against a Defendant company is res judicata protection for that company against others acting in the public interest so long as the same “primary rights” are at issue in both cases. Consumer Advocacy Group, Inc. v. ExxonMobil Corporation (2008) 168 Cal.App.4th 675, 688. While some bounty hunter lawyers resist these res judicata claims, some defendants are adamant that their settlements, for greater protection, should be in the form of consent judgments.

However, consent judgment settlements can be quite a bit more expensive than out of court settlements. By way of example, the average cost of an out of court Proposition 65 settlement in 2018 was $20,718, while the average cost of a bounty hunter consent judgment was $70,841.

And here’s something else that shouldn’t be too much of a surprise: Of the $30,385,439 in consent judgment settlements in 2018, about 14.5% went toward penalties, 6.35% to payments in lieu of penalties, and 79.15% to attorneys’ fees and costs.

As we mentioned in our February 11 post, the Attorney General’s data is available here. But we had some disagreements with some of the AG’s report. In some instances, its numbers don’t match the actual consent judgments. In others, they treated settlements and payments by multiple parties as if they were made by just one. So we did our best to unwind that, and we also took the Attorney General’s one settlement out, leaving for this reporting the 406 consent judgment settlements between private party enforcers / bounty hunters and companies..

And with that said, our entire report is right here. And as before, if you have trouble reading either half of the chart, click it and it will pop up bigger in a larger window.

 

 

HERE'S CBL'S REPORT ON 2018 OUT OF COURT PROPOSITION 65 SETTLEMENTS

The Attorney General has finished posting the data on all of 2018's Proposition Settlements.  As Cal Biz Lit often does, we've begun summarizing, and our summary of the out of court settlements is now complete. It's long been the case that out of court settlements are for lower amounts than settlements involving consent judgments, and last year was no different:  As is usually the case, the out of court settlements were all by private part enforcers / bounty hunters, none involving the Attorney General.  And of the 467 2018 out of court settlements, the average amount was $20,718.  By comparison, of the 367 2018 settlements with private part enforcers resulting in consent judgments, the average amount was $82,492. 

For the out of court settlements, 87.12% of the payments were for attorneys' fees and costs, with nearly all of the balance being for penalties. 

The Attorney General's out of court settlement data posting shows a total of 36 private party enforcers, plus, in two instances, bounty hunters who paired up. In this post, for each we will show the total number of out of court settlements, the predominant chemical, the average settlement, and lowest and highest settlements.  This makes for a rather long "summary." Someday soon, we will provide a similar report for the 2018 consent judgments. It won't be short either. 

If you have trouble reading this, just click it and it will pop up bigger in a larger window.  And the second half and totals appear after the break.

SUMMARY OF 2018 OUT OF COURT SETTLEMENTS

 

More after the break.

 

Proposition 65: The Most Commonly Noticed Chemicals in 2018

Proposition 65 provides that "the governor shall cause to be published a list of those chemicals known to the state to cause cancer or reproductive toxicity."  It is failure to provide a "clear and reasonable warning" before exposure to those chemicals that subjects a company to Proposition 65 liability.  While there are more than 900 chemicals on the list, the vast majority are never the subject of a Proposition 65 claim. 

From time to time, Cal Biz Lit surveys the years' notices to determine which chemicals are most often the subject of notices.  And now, we've done our full review for 2018. And the result is this: 

In other words, 92.8% of the noticed exposures involved one or more of ten chemicals, and 64.5% involved DEHP and lead or lead compounds.

Of the other chemicals noticed, the following were noticed ten or more times: styrene (23), wood dust (22) ethylbenzene (21), benzene (19), nickel (18) benzofuron (17), quinolone and its strong acid salts (17) and polychlorinated biphenyls (10).

And the following were noticed between two and five times: Marijuana smoke, Di-isodecyl phthalate (DIDP), benzophenone, Chromium (hexavalent compounds), formaldehyde, Tetrochloroethylene (Perchloroethylene) and toluene.

And finally, twenty-seven chemicals were noticed only once: flame retardants Tris(1,3-dichloro-2-propyl) phosphate (TDCPP) and Tris(2-chloroethyl) phosphate, 1,1-Dichloro-2.2-bis(p-chloropheny)ethylene (DDE), 1,4-Dioxane, Bromodichloromethane, Carbon disulfide, Chloroethane (Ethyl chloride), Chloroform, DDE (Dichlorodiphenyl-dichloroethylene), Trichloroethylene, Vinyl chloride, 1,3-butadiene, acetaldehyde, benz[a]anthracene, benzo[a]pyrene, soot, benzo[b]fluoranthene, dibenzo(a,h)pyrene, benzo[k]fluoranthene, carbazole, chrysene, chloroform, furan, napthalene, dichloromethane, and indeno[1,2,3-cd]pyrene.

Note that many of the infrequently noticed chemicals have been noticed only in connection with airborne exposure, the majority allegedly caused by charcoal and “steam stones” in hookah bars.

There have been some changes in frequency, but not that many. When we analyzed the 2016 notices, the ten most frequently noticed chemicals were Lead or lead compounds, DEHP, DINP, Cadmium, Carbon Monoxide, Acrylamide, DBP, Benzophenone, Coal tar, DBP and BPA.

We previously analyzed notices for the first five months of 2017, in the same post as the 2016 ones.  We noted then that the most frequently noticed chemicals were DEHP, Lead or lead compounds, DINP, Marijuana Smoke, Acrylamide, Cadmium, DIDP, BPA, Myclobutanil and Carbaryl. The latter two are pesticide / fungicides that were allegedly being found in cannabis edibles sold at medical marijuana dispensaries. For unknown reasons, the attorney general strongly objected to the many notices of these pesticide /fungicides. The private party enforcer did not proceed with them, and they haven’t been noticed since.

The fact that the most frequently noticed chemicals are those shown in our 2016, 2017 and 2018 analysis is not a guaranty that other chemicals won’t be the subjects of Proposition 65 notices and litigation. Ideally, companies doing business in California should be aware of the risk that their activities or products in California may be alleged to cause exposures to any of the listed chemicals without required warnings. However, the “top ten chemicals” for each of the past three years certainly constitute a starting point for any risk management efforts.